CMBS Delinquencies Continue to Drop

One of the biggest commercial real estate fears of a few years ago, the maturation of CMBS loans leading to mass defaults, hasn’t come to fruition in the way some predicted.

August marked the fourth consecutive month of a drop in delinquencies, down to 2.48 percent from 2.64 percent in July, according to Fitch Ratings. The firm cited continued new loan issuances and resolutions of pre-recession loans by special servicers as the main reasons for the decrease. There was $5.8 billion in new issuances in August, compared to $652 million in resolutions during the month.

There was only $115 million in delinquencies in August, the lowest figure since 2015. The largest one was $25.1 million for a mixed-use asset in New York City’s Manhattan Chinatown neighborhood for a mixed-use building at 55-59 Chrystie Street.

All of the Fitch-tracked commercial real estate sectors saw a decrease in August. Retail, with the highest delinquency rate, dropped from 5.6 percent to 5.31 percent, in part because of the resolution of $281 million in loans, including $77.6 million for Shadow Lake Towne Center, a 636,000-square-foot asset in Papillon, Neb.

The office rate fell from 3.69 percent down to 3.37 percent. Its resolutions totaled $260 million, including a $35.1-million loan for 1001 Frontier, in Bridgewater, N.J. Hotels dropped from 2.51 percent to 2.33 percent. Mixed-use assets stayed flat, at 2.26 percent. Industrial was down to 2.18 percent from 2.26 percent. Multifamily stayed put at 0.45 percent.

About GRS Group:
GRS Group is a leading provider of commercial real estate (“CRE”) services worldwide. With offices across the United States, Europe, and affiliates around the globe, GRS Group provides local market knowledge with a global perspective for institutional real estate investors, occupiers and lenders worldwide. The GRS Group team has evaluated and advised on over $1 trillion in CRE transactions.